The ATO says it is still finding that some aspects of the JobKeeper turnover tests continue to require further explanation. It has therefore issued a law companion ruling, LCR 2020/1, to aid practitioners and their clients in determining the decline in turnover that is a required criteria for eligibility for the JobKeeper payment.
The test calls for a calculation of “current GST turnover” and “projected GST turnover”, which are terms defined in Division 188 of A New Tax System (Goods and Services Tax) Act 1999 (GST act), subject to modifications to those definitions by the payments and benefits rules. These modifications are, for example, changing “current GST turnover” and “projected GST turnover” to the relevant period being tested rather than for 12 months.
To help with the task of calculating declines in turnover, LCR 2020/1 covers four relevant steps:
- what supplies are relevant when calculating projected GST turnover and current GST turnover
- how you allocate supplies to relevant periods
- how you determine the value of each supply that has been allocated to a relevant period, and
- the ATO compliance approach, which effectively allows you to work out the second and third steps at the same time
In issuing the law companion ruling, the ATO notes that the application of the law may be difficult on a practical level for certain entities depending on circumstances, and that these circumstances will most likely vary considerably between entities. It accordingly, via LCR 2020/1, sets out practical compliance approaches that can be applied by an entity to calculate its turnover.
Note that the ruling does not directly address the alternative tests for decline in turnover, however the ATO states that the principles in the ruling will assist practitioners in applying the alternative tests.
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